Mortgage Lending

Countrywide has big apartment appetite
Mortgage giant has plans to replicate its single-family mortgage success in the multifamily arena.

By John Zipperer

APARTMENT FINANCE TODAY • JULY/AUGUST 2006

The market for permanent financing is a crowded place these days, but one new player is determined to serve apartment developers for the long term. Judging from its past successes, it can’t be counted out.

Countrywide Commercial Corp., a behemoth in the single-family mortgage world, launched Countrywide Commercial Real Estate Finance (Countrywide Commercial) in 2004, doing its first loan at the end of that year. To run the new company and give it some instant industry credibility, four executives from Coastal Capital Partners were drafted: Boyd Fellows, Warren de Haan, Chris Tokarski, and Stewart Ward. The company made 420 loans in 2005 totaling more than $4.8 billion. That total includes loans for other commercial property types besides multifamily, but Fellows said he expects the multifamily portion of the business to grow by 50 percent a year for a couple years. Countrywide Commercial’s executives pledge to keep growing until Countrywide Commercial is a dominant player in the multifamily industry, just like Countrywide is in single-family lending. "It may take 10 years, but that’s the goal,” said Fellows.

Each of the company’s offices in Atlanta, Chicago, Dallas, Los Angeles, Miami, New York, and San Francisco operates independently, with its own underwriters, closing specialists, and other staff. “When we have our bankers and the local credit guy go out and stand on the property and [determine] that we’re going to lend you X-dollars for X-term, that’s better than someone in an office building in New York who tries to beat that by a basis point to win the deal,” said Fellows.

Speed is another feature the company hopes will be a strong point. “Just being able to rate-lock six months before we were done” was a big plus, said Dennis Broward, a general contractor with Davis, Calif.-based Broward Brothers, Inc. Broward’s mortgage broker suggested Countrywide Commercial when he was looking for a takeout on a construction loan from First Bank for a 51-unit apartment building in Davis. In May 2005, he got a forward commitment on a $10.2 million loan through Countrywide Commercial. Broward credits a speedy rate lock with allowing him to get a 5.3 percent interest rate rather than the nearly 6 percent rate he estimated he would have paid with a later loan closing.

In a $10.9 million apartment acquisition in Kansas City, Countrywide Commercial's ability to fast track the deal by getting it pre-screened with a committee of senior Countrywide Commercial executives was key to meeting the seller’s schedule, said Peter Slaugh, principal of Steelhead Capital, a mortgage broker who worked on the deal with Countrywide Commercial. “They’ll take the time at a senior level to look at a deal, and not everyone does that,” said Slaugh.

Countrywide Commercial does not yet do Fannie Mae, Freddie Mac, or Federal Housing Administration financing, but is considering adding agency lending.